Highlight Tech stocks not spared as markets in sea of red after China’s yuan move

by **Cals** Wed 12 Aug 2015, 19:00

Highlight
Tech stocks not spared as markets in sea of red after China’s yuan move

KUALA LUMPUR (Aug 12) Shares of semiconductor and technology-related (tech) stocks listed on Bursa Malaysia have slumped as much as 9% today even as the US dollar continued to strengthen against the ringgit, which should have been a boon for the exports-focused industry.
At the time of writing, the greenback was seen continuing its upward climb against the local currency, up 1.5% to quote at 4.0330. Its all-time high against the ringgit was seen on Jan 9, 1998, when it hit 4.7125.
The slump of the stocks is said to be due to the overall bearish market sentiment of broader market. The FBM KLCI was down 30.30 points or 1.85% at 1606.41 points at 3.25pm.
Regionally, markets were also in the red at the time of writing: Japan’s Nikkei 225 fell 1.58%, Hong Kong’s Hang Seng declined 2.39%, while South Korea’s Kospi was down 0.56%.
Among the major tech stocks on the decline today was Malaysian Pacific Industries Bhd (MPI) ([You must be registered and logged in to see this image.] Financial Dashboard), which led the top losing tech stocks on the Main Market by declining 26 sen or 4.09% to trade at RM6.10, with 238,600 shares done.
It was followed by Inari Amertron Bhd's 23 sen or 7.44% fall to RM2.86, with 3.21 million shares done.
KESM Industries Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) retreated as much as 20 sen or 5.18% to RM3.66, though its trading volume was thin, with just 62,000 shares done.

Globetronics Technology Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) was down 16 sen or 2.77% at RM5.62 per share after some 351,600 shares were traded.
Vitrox Corporation Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) also slid 15 sen or 4.87% at RM2.93, registering a trading volume of 79,500.
On the ACE Market, Microlink Solutions Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) skidded 18 sen or 12.59% to trade at RM1.25. It was the top decliner on the technology sector of the ACE market.
SCC Holdings Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) fell 15 sen or 6.67% at RM2.10, with some 34,400 shares done, whileAsdion Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) was down 4.5 sen or 5.81% to trade at 69 sen per share.
An analyst who declined to be named said the tech stocks’ slide today could also be due to the devaluation of the yuan.
The analyst also told theedgemarkets.com over the phone that the China government had announced it would be injecting some 120 billion yuan (about US$19.2 billion) to boost its domestic integrated circuit (IC) industry.
“This was to reduce the country's reliance on imported chips, the core product for high-tech and manufacturing industries,” he added.
He stressed this would probably heighten competition among local semiconductor players vying for the same customers as China manufacturers may offer a more competitive pricing.
Meanwhile, Semiconductor Equipment and Materials International (SEMI)'s China president Allen Lu said the new policies will exert significant influence on the semiconductor ecosystem in China.
“China's semiconductor industry will expand dramatically given the scale of equity funds that are leveraged by government investments,” he said.
In his report dated Aug 4, he said the new investments will contribute to a powerful expansion in China-based capacity and create a stronger and more globally prominent semiconductor industry in China.
“These newly established national and local IC industry investment funds will focus squarely on fab and IC design companies, but also stimulate the IC industry merger and acquisition (M&A) activity in and outside of China," he added.
Lu said China’s revenue target from the semiconductor industry this year is more than US$57 billion (RMB 350 billion) with a compounded annual growth rate (CAGR) target of more than 20% between 2015 and 2020.
Meanwhile, it is also worth noting that the worldwide mobile phone sales are projected to slow down due to weaker sales in China, the world's largest smartphone market.
This is expected to affect the export-focused local semiconductor industry as China's smartphones market is one major growth driver.